Spotify stock is down Thursday as the company missed analyst projections on sales, but the company reported double digit year-over year-increases in both revenue and monthly active users, and ad revenue, which had taken a slight dip because of the pandemic last quarter, returning to growth.
Revenue, up to $2.3 billion for the quarter, increased 14% from the same time last year, with gross profit at $570 million, about 11% higher than last year. Monthly active users grew nearly 30% this quarter compared to last year, now surpassing 320 million. 144 million of those users are premium paying subscribers, while the remaining 185 million are on Spotify’s ad-supported service. Spotify also benefited from a slate of high-selling albums that’ve come out during the reported quarter, like Taylor Swift’s Folklore and Pop Smoke’s posthumous album Shoot for the Stars, Aim for the Moon, which have both streamed significantly well.
As Variety reports, Ek said the company is exploring potential price increases for its service, but that the tumult of the pandemic may push any price hikes back.
Ad revenue, Spotify’s notable hit from last quarter and the most apparent casualty of the pandemic, grew about 9% year over year, at about $215 million for the quarter. Spotify expects to grow its monthly active users to as much as 345 million in the fourth quarter, with between 150 and 154 million paying subscribers.
Spotify’s year has perhaps been most defined by its aggressive acquisition of original podcasting content as the company looks to dominate that space. Spotify bought Bill Simmons’s culture and sports site The Ringer at the beginning of the year — presumably because of its slate of popular podcasts — and later signed exclusive deals with Joe Rogan, Michelle Obama and Kim Kardashian to name a few. But The Rogan acquisition, which bounced up Spotify stock by about 8% after the deal closed, has recently proven controversial as the podcaster brought on far-right radio host and conspiracy theorist Alex Jones earlier this week, much to the chagrin of some Spotify staffers.
Ek said in his opening remarks for the call that, with a strong quarter, Spotify will be looking for more original content acquisitions.
“Bottom line, as I look at the increase specifically in reach that we are seeing this quarter, it gives me confidence in our ability to monetize that growth,” Ek said on the call. “So to fuel the flywheel, you will see us continue to invest in enhancing our user experience, furthering market expansion, and developing and acquiring unique content from both new and established creators.”